Officials: fiscal cliff would harm Minn. economy

The agency says Gov. Mark Dayton and state lawmakers face a projected $1.1 billion budget deficit next year, the smallest in some time.

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By Associated Press

Crookston Times - Crookston, MN

By Associated Press

Posted Dec. 6, 2012 at 9:00 PM

By Associated Press

Posted Dec. 6, 2012 at 9:00 PM

St. Paul, Minn.

Minnesota budget officials say the state's economy would be hit hard if President Obama and Congress can't strike a federal debt deal to avoid the so-called fiscal cliff.

The warnings from officials at Minnesota Management and Budget came Wednesday as they announced their economic forecast. The agency says Gov. Mark Dayton and state lawmakers face a projected $1.1 billion budget deficit next year, the smallest in some time.

But State Economist Tom Stinson says that would get considerably worse under a fiscal cliff scenario in which federal spending cuts and higher income taxes take effect. He predicts the state would shed 115,000 jobs in 2013-14, and personal income would drop more than 4 percent by 2015. He also says state tax revenue would drop by hundreds of millions of dollars.